- The Washington Times - Thursday, September 28, 2006

ASSOCIATED PRESS

Lawmakers compared Hewlett-Packard Co.’s spying scandal — which has toppled the company’s chairwoman, two other directors and at least two high-ranking executives — to Watergate and Enron yesterday.

Members of the House Energy and Commerce Committee demanded to know how investigators for the respected Silicon Valley anchor could use tawdry tactics such as “pretexting,” impersonating other people to obtain their phone records.

In one key document cited by the panel, an HP investigator had warned higher-ups, including the company’s chief ethics officer, that the methods used to find the source of boardroom leaks were possibly illegal and at the very least could damage the company’s reputation. Ethics officer Kevin Hunsaker left the company on Tuesday.

But few answers emerged. Ten persons involved in the cloak-and-dagger operation — including Mr. Hunsaker and General Counsel Ann Baskins, who resigned yesterday — asserted their Fifth Amendment right against self-incrimination and refused to answer questions.

Former Chairwoman Patricia Dunn, who stepped aside last week as the scandal showed no signs of abating, told the panel that she had been assured that phone records had been obtained lawfully from public sources — and in previous unrelated investigations by the company.

“I deeply regret that so many people, including me, were let down by this reliance” on such advice, Mrs. Dunn told the panel.

She stumbled at turns and corrected herself when asked how much she knew of the shady tactics, including when she learned that the investigators had used pretexting to obtain telephone records. Although she said she was unaware of the details, she repeatedly defended the probe as necessary to stem serious leaks of confidential information.

“My recollection was incomplete; I haven’t seen all the evidence here,” she said at one point. She said it wasn’t until July that she became aware that pretexting was part of the “standard arsenal” of the investigators’ tactics.

“I dispute having ever understood or being told that the fraudulent use of identity was ever a part of this investigation,” Mrs. Dunn insisted. She noted that she was “pretexted” as well.

The probe targeted every member of the board, HP investigator Fred Adler testified.

The panel also heard from Chief Executive Officer Mark Hurd, who apologized for the investigatory tactics when he replaced Mrs. Dunn as chairman last week but denied having direct knowledge of the probe’s methods.

“If Bill Hewlett and Dave Packard were alive today, they’d be appalled,” he said, referring to the company’s revered founders.

In addition to masquerading as HP directors, employees and reporters to obtain their telephone records, company investigators surveilled their subjects and their relatives, sifted through their garbage and sent an e-mail with tracing technology in an attempt to dupe one reporter.

In testimony prepared for yesterday’s hearing, Mr. Hurd said Mrs. Dunn had told him of the existence of the investigation, “but I was not involved in the investigation itself.”

“How did such an abuse of privacy occur in a company renowned for its commitment to privacy? It’s an age-old story. The ends came to justify the means,” his prepared testimony said.

Lawmakers on the committee expressed outrage at HP’s actions.

“We have before us witnesses from Hewlett-Packard to discuss a plumbers operation that would make Richard Nixon blush were he still alive,” said Rep. John D. Dingell of Michigan, ranking Democrat on the committee.

Other lawmakers said the situation was reminiscent of the Enron Corp. debacle, in which top management claimed not to know of serious wrongdoing that ultimately brought the company down. The panel members said the comparison was especially disappointing considering that HP, a 67-year-old computer and printer maker, has a reputation for integrity.

“It’s a sad day for this proud company,” said Rep. Diana DeGette, ColoradoDemocrat. “Something has really gone wrong at this institution.”

Rep. Edward Whitfield, Kentucky Republican and chairman of the committee’s investigative panel, demanded to know why, with many high-ranking HP executives and attorneys involved in the probe, “No one had the good sense to say ‘Stop.’”

The committee sought testimony from Ronald DeLia, the operator of the detective firm hired by HP; Mr. Hunsaker; and Anthony R. Gentilucci, who managed HP’s global investigations unit in Boston. They — as well as outside investigators thought to have served as the foot soldiers in the company’s efforts — took the Fifth.

That deprived the committee of an explanation of why HP higher-ups apparently dismissed one investigator’s warnings that the probe was venturing into dangerous territory.

“I have serious reservations about what we are doing,” Vince Nye, a senior investigator in HP’s security department, wrote in a Feb. 7 e-mail. “I am requesting that we cease this phone-number gathering method immediately and discount any of its information.”

As lurid details of the affair emerged in recent weeks, casualties have mounted at HP, which was No. 11 on Fortune magazine’s most recent tally of the biggest U.S. companies. HP announced general counsel Ms. Baskins’ resignation just ahead of the hearing.

Besides the inquiry by the House committee, federal and California prosecutors are investigating whether company insiders or outside investigators broke the law.

California Attorney General Bill Lockyer has said he has enough evidence to indict HP insiders and contractors. The Securities and Exchange Commission is pursuing a civil inquiry.

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